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The Rubik’s cube of legislating the Mineral and Petroleum Resources Development Amendment Bill

Amidst ‘chamber politics’ that has thwarted Parliament’s public perception and credibility, it is presented with a significant opportunity to exhibit its Constitutional powers and functions as the national legislative authority and platform for public consideration of issues and overseeing executive action.

On 16 January 2015, President Jacob Zuma referred the Mineral and Petroleum Resources Development Amendment Bill to the National Assembly – eleven months since the National Council of Provinces passed the Bill and Parliament transmitted it for Presidential assent and proclamation into law.

The President’s referral requires Parliament to exercise its Constitutional mandate to review within certain parameters and grounds, the process and legislative considerations it previously adopted in passing the Bill.

This presents Parliament with a legislative Rubik’s cube that corresponds with South Africa’s investor friendly pitch at the 2015 World Economic Forum – punting the viability and stability of South Africa’s mining, resources and energy sector.

There was no shortage of lobbying on the amendment bill. Some labeled it “controversial” and discouraging investment in South Africa’s embattled mining industry and the growth of the fledgling oil and gas sector. Stakeholders lamented the Parliamentary public consultation process, the redrafting of the Bill by the Department of the Mineral Resources and the timing of the Gazette notice publishing the amendments to the Act on 27 December 2012.

The President’s letter of referral addressed to the Speaker of the National Assembly, cites the following concerns regarding Bill’s ability to pass constitutional muster:

The definition of the Act elevating the Codes for Good Practice for the South African Minerals Industry, the Housing and Living Conditions Standards for the Minerals Industry and the Amended Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry to national legislative status.

Inconsistency of the sections dealing with local mineral beneficiation, with South Africa’s obligations under the General Agreement on Trade and Tariffs (GATT) and the Trade, Development and Cooperation Agreement (TDCA) as it relates to quantitative restrictions on exports.

Insufficient consultation by the National Council of Provinces and provincial legislatures, including the consultation period and the timeliness of notification of public hearings by provincial legislatures.

The need to consult the National House of Traditional Leaders with regard to customary law and customs of traditional communities, in respect of land owned or occupied by traditional communities where mineral or geological investigations are contemplated.

The President’s referral on these bases is significant. Prior to the May 2014 general election, the 4th ANC-led administration and Parliament stewarded the bill through the legislative process. This was aligned with the ANC elections manifesto for the transformation of the mineral and energy sector.

This drive towards advancing increased local beneficiation and industrialization finds its genesis in the objectives of the Freedom Charter, which proclaims that the mineral wealth of the country “be owned by the people as a whole”.

The ANC’s 2015 January 8 Statement reaffirmed the furthering of “radical socio-economic transformation” and in reference to the Mineral and Petroleum Resources Development Act (MPRDA) stated:

“The vast mineral wealth of our country, which lies beneath the soil, has been transferred to the ownership of the state on behalf of the people as per the Freedom Charter. However this has not yet translated to equal and full benefit of all South Africans. The ANC commits itself to continue working with our people to ensure that there is enhanced benefit from this ownership. This year we must finalise the amendments to the applicable laws to ensure that mineworkers and mining communities share, much more equally, in South Africa’s mineral wealth”.

All of these factors cascade into three distinct and interlinked messages.

Firstly, the ANC’s policy position on State participation in the minerals, oil and gas sector remains consistent with the original intent of the Bill and the principles of the Freedom Charter – notwithstanding the referral of the Bill back to Parliament. These are further echoed in the party’s 2014 elections manifesto and the 2012 National Conference resolutions.

In the Organisational Report to the party’s June 2012 National Conference, ANC Secretary-General Mr. Gwede Mantashe called for delegates to assess progress made in implementing the MPRDA in order to ensure compliance with the Act, in the context of maintaining the state’s strategic role in the mineral and energy complex as key sector of the economy.

In June 2015, the ANC National General Council gathers to assess the party’s mid-term progress and policy review to shape resolutions for adoption at its National Conference in 2017.

Any fundamental legislative realignment on the MPRDA and which deviates from the original policy intent is unlikely to occur in isolation of these party political policy processes which overlaps with the timing of the Parliamentary review process.

This represents the Parliamentary and legislative Rubik’s cube through which MPs are challenged to achieve a reasonable balance between their party policy objectives and ideologies, public policy and the differing interpretations of what constitutes policy certainty.

Secondly, Government is signaling to the investor, mining, oil and gas community, that the attainment of these policy objectives will not be pursued at the expense of legislation that disincentivises the investment inflow upon which Government’s quest for socio-economic transformation is dependent.

Thirdly, the State is communicating its sensitivity to the impact of sub-standard legislation that might be open to Constitutional challenge and which therefore undermines the ability of the State to advance its socio-economic objectives.

It was former Speaker of the National Assembly, Max Sisulu who vocally cautioned lawmakers during the 4th democratic about the perils of drafting poor quality legislation. During the 2013 Debate on Parliament’s Budget Vote, he bemoaned the number of laws passed by the National Assembly being returned for correction and being found unconstitutional as the consequence of “inadequate scrutiny”. He underscored the growing complexity and technicalities of legislating and the need for Parliament to draw on and maximise the availability of stakeholders to ensure access to specialized knowledge and information.

Parliament is Constitutionally endowed with powers to deal with legislation returned to it for review, as well as drafting new alternative legislation, private members legislative proposals and addressing constitutional concerns. In the case of the MPRDA, the extent of Parliament’s scope and oversight is restricted to the parameters of the constitutional concerns raised by the President.

By referring the matter to the Portfolio Committee on Minerals Resources, the Speaker of Parliament has delegated the Committee a formidable maiden legislative task, since its inception following the May 2014 general elections.

The Committee must familiarise itself with the principles and imperatives behind the legislation, the legislative and consultative process followed by its predecessors in the 4th Parliament and stakeholder input received.

Although the provisions exist for the Committee to expand its review of the legislation, it is premature to preempt the Committee’s approach to the referral and the intersecting political considerations, policy objectives and industry imperatives.

This process presents the Committee with a multifaceted piece of legislation that lends itself to the approach advocated by former Speaker Sisulu. It is a landmark opportunity for this Committee to initiate itself into Parliamentary affairs.

In recognizing the opportunity that this presents, stakeholders should be cognizant of the complex interplay between party policy, public policy, the separation of powers between the Executive as well as Parliament and its Constitutionally derived powers, functions and rules of procedures. All of these weave an intricate web of institutional arrangements comprised of Parliament’s legislative and oversight structures, party political parliamentary caucuses, Parliamentary and State legal advisors and Parliamentary programming structures. Unraveling these intricacies and the solutions to be crafted require a robust and constructive approach by decision-makers and stakeholders alike.

CAPE TOWN, SOUTH AFRICA:The conclusion of the public consultative process on the South African Biofuels Regulatory Framework is a significant milestone for Mabele Fuels, a pioneering investor in the local biofuels industry.

The Department of Energy recently published the Biofuels Regulatory Framework for stakeholder and public comment by 10 February 2014.

According to Mabele Fuels Joint Chief Executive Officer, Mr. Zahir Williams “We are excited that the period for public comment has closed and that the Department of Energy has publicly targeted end of February 2014 for completion of the biofuels regulatory process. We believe that significant progress has been achieved in finalizing a sound regulatory framework that will contribute to the establishment of a sustainable biofuels industry.”

The conclusion of the biofuels regulatory consultative process takes Mabele Fuels another step closer to its long held vision of constructing and operating a world-class biofuels refinery in South Africa. Mabele Fuels’ refinery is set to manufacture 158 million litres per annum of fuel grade bioethanol from grain sorghum by the 1 October 2015 timeframe for mandatory blending of biofuels with petroleum.

Job creation, industrialisation, rural transformation and agricultural development remain core priorities of government and for a developing nation such as ours, which will undoubtedly be reflected in this week’s State of the Nation address.

“Our project is positioned to deliver between 15 000 – 18 000 mainly agricultural jobs through our R2.5 billion investment into developing South Africa’s largest bioethanol refinery at Bothaville in rural Free State. Therefore, Mabele Fuels, is encouraged by this significant development of reaching closure of the regulatory consultative process which signals to us that government is committed to leveraging the biofuels industry as a contributor to large scale job creation and rural development” says Mr. Willliams.

Mabele Fuels will make further announcements on the project’s progress and the finalisation of the regulatory process.

– ENDS –

NOTE TO EDITORS:

Mabele Fuels is a South African company owned by Black Economic Empowerment groupings, emerging farmers, local investment institutions and private investors. Its business is the manufacture of fuel-grade ethanol from grain sorghum for sale in the South African bio fuels market. Grain sorghum is cultivated in South Africa’s traditional summer grain areas, like the eastern Free State and eastern parts of the North West provinces, which receive summer rainfall. It is an ideal crop for bio fuels because it can withstand droughts and works well on fallow soil.

Mabele Fuels is at an advanced state of readiness to commence construction of a large-scale bio ethanol refinery (158 million litres per annum) in the Bothaville area of the Free State province. The project has enjoyed strong Government support and recognition. In 2012 the Department of Energy promulgated the mandatory blending of bio ethanol with petroleum. In September 2013 the Minister of Energy promulgated 1 October 2015 as the effective date for mandatory blending to commence in the country.

Mabele Fuels has been expecting imminent Government approval to enable immediate implementation of its refinery construction program, for completion before the 1 October 2015 effective date of the mandatory blending of bio fuels with petrol at a 2% blending ratio.

There has since been significant public discourse and debate about the matter, which is likely to continue into the future as the local bio fuels industry develops toward this vision. Mabele Fuels will continue to play a leading and proactive role in heightening and informing public education and awareness about biofuels in South Africa, in particular grain sorghum as a biofuels feedstock.

On the eve of the 2013 State of the Nation Address (SONA), ETHICORE commends Parliament on its adoption of the theme “Socio-economic development through oversight and public participation” for the 2013 SONA.

Citizen activism and engagement is a central feature and tenet of the National Development Plan (NDP) recently endorsed and adopted by Government and the ruling African National Congress, and which has been coalesced around by key sectors of society (e.g. business, labour, civil society and political parties) as the official blueprint for the country.

Effective parliamentary oversight of government, policy implementation, legislative compliance and regulatory efficiency, as well as facilitating dynamic and robust public participation and consultation with citizens and key sectors of society, is a fundamental Constitutional requirement of the legislature as a whole, in order to give practical effect to the Constitutional requirements of cooperative governance and a people-centred Parliament.

When undertaken effectively, such dynamic parliamentary oversight and public participation significantly enhances the prospects for improved government performance, accountability and quality legislative and policy decision-making. Effective public and citizen advocacy can significantly contribute to enriching the quality of dialogue and debate on issues of key national importance.

The 2013 State of the Nation address should set the tone for how Parliament needs to capacitate and integrate its structures, processes and procedures to improve Parliamentary oversight of and engagement with the NDP, and the role of public participation and consultation therein. This includes ensuring that Parliamentary oversight; as well as parliamentary public and stakeholder consultation on the NDP is aligned with departmental budget allocations and strategic plans and priorities.

The extent of the focus on the NDP in the 2012 SONA, therefore has the prospect of fundamentally reshaping the parliamentary landscape from an oversight and participatory perspective – a most challenging and demanding litmus test for the 2013 parliamentary SONA theme and the context for Parliament’s work over the remainder of 2013 and the run-up to the 2014 general elections.

ETHICORE Political Consulting is a leading and preeminent South African political consultancy, principally specializing in all aspects of political analysis, advocacy and lobbying, governmental relations, parliamentary affairs and political communications.http://www.ethicore.co.za